First National Bank of Plattsmouth v. Estate of Lehnhoff

Jackson, 0. The Plattsmouth Brick and Terra Cotta Manufacturing Company, a corporation doing business in Cass county, was insolvent-. It was indebted to the First National Bank of Plattsmouth and the Bank of Cass County. The First National Bank contemplated an action against the stockholders of the manufacturing company for the purpose of recovering the amount of indebtedness of that company to the bank. Certain of the stockholders of the manufacturing company submitted to the creditor banks the following written proposition: “Plattsmouth, Neb., May 11, 1903. We, the undersigned stockholders, do each agree with each other and the First National Bank of Plattsmouth and the Bank of Cass County of Plattsmouth, or either of them accepting in writing hereon this proposition, that if they will refrain from suing us as stockholders of the Plattsmouth Brick & Terra Cotta Manufacturing Company until the assets of said corporation are exhausted in suits by each of them to be maintained upon their respective notes against the corporation, when the deficiency is ascertained, we will prorate among ourselves, based upon our holdings of stock in said corporation, such deficiency and pay it. J. G. Richey, W. J. White, F. D. Lehnhoff, A. Baxter Smith, D. Hawksworth, Fred Goos per Henry, T. H. Pollock, H.. B. Burgess.” The First National Bank accepted the proposition, and proceeded in an action at law in the district court for Cass county to recover judgment against the manufacturing company, upon which execution was issued and all of the assets of the company sold. In the meantime F. D. Lehnhoff, one of the stockholders whose name [305] appeared on the agreement with the bank, died, and his estate was in process of administration. The First National Bank filed its claim against Lehnhoff’s estate for the proportionate share due the bank under the terms of the written agreement. Prom an order allowing the claim an appeal was taken to the district court, where a jury trial resulted in a verdict and judgment favorable to the bank. The executrix appeals. It appears from the evidence that Lehnhoff’s subscription to the capital stock of the manufacturing company was fully paid up, and that his name on the written agreement was in fact signed by his son, George Lehnhoff. It is urged on appeal that the written agreement was without consideration and for that reason unenforceable, and that George Lehnhoff was without authority to sign the written agreement on his father’s behalf. The claim of want of consideration for the written agreement arises out of an application of section 4, art. XI5 of the constitution.. The provisions of that section are: “In all cases of claims against corporations and joint stock associations, the exact amount justly due shall be first ascertained, and after the corporate property shall have been exhausted the original subscribers thereof shall be individually liable to the extent of their unpaid subscription, and the liability for the unpaid subscription shall follow the stock.” It is said that the agreement to defer action against the stockholders until the remedy against the corporation had been exhausted is a contract to observe the mandatory provisions of the constitution; that no action on behalf of the bank could be maintained in any event against the stockholders until judgment had first been obtained against the corporation and the corporate property exhausted. The constitutional provision invoked on behalf of the estate has been several times construed by this court. In Globe Publishing Co. v. State Bank, 41 Neb. 175, an action against the stockholders of a corporation direct for a debt due from the corporation, where it was claimed the liability of the stockholders arose by reason of a failure to [306] publish the annual notice provided by statute of its existing debts, it was held that the creditor had no right of action against the stockholders until it had reduced its claim against the corporation to judgment and until execution issued upon such judgment had been returned wholly or in part unsatisfied. In Farmers Loan & Trust Co. v. Funk, 49 Neb. 353, an action to enforce the special liability of a stockholder in a banking corporation under the provisions of section 7, art. XI6 of the constitution, it was held that before the special liability could be enforced against individual stockholders the assets of the coi*poration must first be exhausted under the provisions of section 4 here being considered; while in State v. German Savings Bank, 50 Neb. 734, it was held-that before the receiver of a banking corporation could enforce the liability for unpaid subscription of the capital stock the indebtedness of the bank must first be ascertained in a proper proceeding for that purpose. It does not appear with any degree of certainty upon what theory the banks originally claimed liability of the stockholders of the manufacturing company for the debts of the company, but the inference is that they supposed the stockholders to be liable generally for the debts of the insolvent corporation and that they might maintain an action against the stockholders direct because of that liability. It does not seem to be important, however, in the determination of this case. Our decision, to be in harmony with the former holdings of this court, must be that the bank on its own behalf could not maintain an action against the stockholders without first exhausting its remedy against the corporation itself. The agreement on the part of the bank to do that which by law it was required to do before it could maintain an action against the stockholders was not a sufficient consideration to support the promise in its behalf. Esterly Harvesting Machine Co. v. Pringle, 41 Neb. 265. It is urged by the appellee, however, that the contract is enforceable independently of the consideration already [307] discussed, because of its being a mutual promise between the stockholders with each other for the benefit of the bank. The rule thus invoked is applicable to subscription lists where a common object is to be obtained for the benefit of all. The case of Armann v. Buel, 40 Neb. 803, does not support the contention of appellee. There the purpose of the subscription was to procure for a railroad corporation a tract of land for the erection thereon of a depot and switch grounds. The agreement was with the owner of the land, who conveyed the title to the railroad company, and the improvements contemplated were made. It is said in the body of the opinion:. “A valuable consideration is one that is either a benefit to the party promising, or some trouble or prejudice to the party to whom the promise is made. Any damage, or suspension, or forbearance of a right, will be sufficient to sustain the promise.” None of these elements are found in the contract in suit.. Again, it is urged that the contract provided for an extension of the time of payment of the debt of the company and that such extension affords a sufficient consideration, but that fact does not appear. On the contrary, the agreement clearly contemplated immediate action against the corporation. We recommend that the judgment of the district court be reversed. ■'Duffie and Albert, CO., concur. By the Court: For the reasons stated in the foregoing opinion, the judgment of the district court is reversed and the cause remanded. Reversed.